277 Section 10.3 Place Copyright Goodheart-Willcox Co., Inc. Wholesalers, or distributors, purchase large amounts of goods directly from manufacturers. Once goods are purchased, they are put into inventory until it is time for distribution. Inventory is the assortment or selection of items that a business has on hand at a particular point in time. Inventory is costly, so it must be effectively managed and protected against theft or damage. Inventory control is the activities and processes involved in managing the products in inventory and related costs. Some of the activities related to inventory control are: • physically storing goods in warehouses with a system to identify their placement • keeping count of each item in the warehouse • maintaining a record of the dollar value of each item in inventory • monitoring items as they come in to and out of inventory Inventory control is discussed in chapter 15. Wholesalers store goods and resell them in smaller amounts to various retailers. A retailer buys products either from wholesalers or directly from manufacturers and resells them to consumers. The Internet is also considered an intermediary between the businesses creating or reselling products and the end users. Agents, also known as brokers, are different from wholesalers because they do not take possession of the product. Instead, they bring buyers and sellers together. The agent may be hired by the buyer or the seller. For example, realtors are agents. They may represent either the buyer or seller of a home. Realtors never take possession of the home, though. They bring together the person selling a house and the person who wants to buy it. The goal of an agent is to create a favorable exchange for both buyer and seller. Agents can be used anywhere in the distribution channel. They are especially useful in facilitating international trade. Channel of Distribution The channel of distribution is the path that goods take through the supply chain. Think about the pencil you are using right now. How did it get from its original manufacturer to you? It may have been manufactured, sold to a wholesaler, sold to a retailer, and then purchased by you. Or, you may have bought it from the wholesaler’s website. The path the pencil took to reach you is the channel of distribution. Distribution is not free. There are many costs associated with getting products to the end users. These distribution costs increase the prices charged for goods or services. Therefore, it is important to find efficient ways to distribute products that keep costs under control.